Post-Crescent review: Utility back billing common in Wisconsin's neighboring states

Aug. 9, 2010

Written by

Ben Jones

Post-Crescent Madison bureau chief

About the law

Wisconsin Statutes affecting back-billing of charges to utility customers:Chapter 196.22: Discrimination forbidden.No public utility may charge, demand, collect or receive more or less compensation for any service performed by it within the state, or for any service in connection therewith, than is specified in the schedules for the service filed under s. 196.19, including schedules of joint rates, as may at the time be in force, or demand, collect or receive any rate, toll or charge not specified in the schedule.Chapter 196.635: Unbilled utility service.All service supplied by a public utility must be billed within 2 years of such service. No customer shall be liable for unbilled service 2 years after the date of the service unless: (1) The utility made a reasonable effort to measure the service, but the customer did not allow the utility access to any device, including but not limited to a meter, necessary to measure service. (2) The customer obtained the service by fraud or deception, including but not limited to theft or tampering with any device, including but not limited to a meter, necessary to measure service. (3) The customer obtained the service by negligent interference by the customer or the customer's agent with equipment necessary to measure service and the interference causes service to go unmeasured.

Post-Crescent findings

A Post-Crescent analysis of back-billing and refund activity during 2009 for the state's seven largest ("Class A") utilities found:

In all, the state utilities charged customers more than they refunded from mistakes and problems. For every dollar utilities refunded, they charged customers $1.65. The utilities refunded $2.9 million to 1,679 customers. At the same time, utilities charged $4.8 million to 5,724 customers.

We Energies, the state's largest utility, issued the most refunds to customers as well as the most charges. It issued 877 refunds totaling $481,207 and 4,323 charges totaling $1,135,310.

Wisconsin Public Service issued the highest dollar amounts in refunds and charges. It issued 438 refunds totaling $2,205,546 and 773 charges totaling $2,724,738.

Only one of the utilities, Madison Gas and Electric, refunded more than it charged. The utility gave back $74,345 to 144 customers and charged $44,108 to 70 customers. Superior Power and Light issued no customer refunds, but issued $72,108 in charges to 21 customers.

The most common reason utilities refunded customers money: a faulty or incorrect meter. Utilities issued 981 refunds for this reason, about 57 percent of all refunds.

The most common reason customers were issued charges: fraud or theft of service. Utilities issued 3,042 charges for this reason, representing about 53 percent of all charges. But most (98 percent) of these theft and fraud cases were reported by just one utility: We Energies. Wisconsin Public Service, Northern States Power and Superior Power and Light all reported no cases of theft or fraud.

In terms of dollars, the biggest utility charges and refunds last year were attributed to "other erroneous billing." Utilities refunded $1,657,198 due to erroneous billing to 257 customers and charged $1,290,979 for erroneous billing. Most of this billing came from Wisconsin Public Service, which issued 92 percent of the refunds ($1,534,273) and 96 percent of the charges ($1,236,760).

About the PSC

The Public Service Commission of Wisconsin is an independent agency charged with regulating the state's utilities. The agency regulates more than 1,100 electric, natural gas, water and water/sewer utilities. It is based in Madison.The commission took root in 1907 when state law extended the powers of what was then called The Railroad Commission to regulate public utilities in an effort to protect the public's interest. Wisconsin was the first state to regulate utilities.The Railroad Commission was renamed the Public Service Commission of Wisconsin in 1931.Contact information: Phone: 888-816-3831 (general), 800-225-7729 (consumer affairs); e-mail: pscrecs@wisconsin.gov; website: psc.wi.gov; Mail: P.O. Box 7854, 610 N. Whitney Way, Madison, WI 53707-7854Source: Public Service Commission of Wisconsin

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MADISON — Wisconsin residents and business owners who end up on the hook for up to two years of undercharged electricity use because of defective meters would fare better in two of four neighboring states.

In Illinois and Minnesota, utilities can collect only one year of back charges when a bad meter is discovered, The Post-Crescent found in reviewing laws and administrative codes. Michigan has a two-year limit. In Iowa, utilities can charge customers for up to five years of undercharges.

Kathleen Friebel, owner of Dorn's Supper Club in Kaukauna, found out about Wisconsin's rules last year when she was hit with a $19,000 bill after We Energies discovered that its meter at the restaurant was under-recording electricity use.

Friebel continues to contest the old charges. In the meantime, her monthly bills have doubled.

"I can't support the costs. They know that and they don't care," she said.

A recent Post-Crescent review found that Wisconsin's largest utilities sent customers more than 5,700 back bills totaling $4.8 million last year for problems like defective meters and billing errors.

Wisconsin utility operators say a combination of statutes and administrative rules prevents them from forgiving back charges. While the limit for collection is two years, customers can get refunds for up to six years of overcharges. In all, the largest utilities paid out $2.9 million to about 1,700 customers last year.

"All states provide some regulation over their utilities so these things have developed over the years," said Charlie Higley, executive director of the Citizens Utility Board, a nonprofit ratepayer advocacy group based in Madison.

Each state takes its own approach:

Illinois: The limit for back-billing is one year, according to Jim Chilson, communications director with the Illinois Citizens Utility Board.

Customer refunds must go back to the date of the first erroneous bill. But if that bill is more than two years old, the customer has to provide proof of the error using his or her own records.

Iowa: Utilities can back-bill and issue refunds for up to five years of charges for problems such as "incorrect reading of the meter, incorrect application of the rate schedule, incorrect connection of the metering installation or other similar reasons," according to that state's administrative code.

Michigan: For metering errors, utilities can't collect for more than two years of back charges except in cases of tampering. The limit is one year for billing errors that result in an undercharge.

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For errors that cause overcharges, utilities must offer refunds that go back up to three years, plus pay the customer 7 percent interest on the charges.

Minnesota: Depending on the circumstances, the time limit for back charges or refunds is six months or one year.

State Sen. Mike Ellis, R-Neenah, said the states' utility regulatory agencies seem to have forgotten that they are supposed to be working for the public.

In his nearly 40 years in the Legislature, Wisconsin's Public Service Commission has become an adjunct of the utilities rather than the customers, Ellis said.

"I don't know of any other industry that sells a product, that has a regulatory relationship that enables them, through the regulatory relationship, to cover for their faulty, inefficient mechanisms to determine the product's price that they are selling," he said.

In response to Friebel's situation, Ellis said he plans to introduce legislation next year that would prevent utilities from back billing. He also plans on taking "a very in-depth look" at the mechanics, functionality and makeup of the Public Service Commission.

"This is just the straw that broke the camel's back," he said.

Brian Manthey, a We Energies spokesman, said the utility has done everything it can within the law to help Friebel, including offering an extended repayment plan for the back charges. It also has reduced her bill by about $3,000 because she qualifies for a lower rate.

"We're still working with her," Manthey said Friday.

Friebel said she recently received a disconnection notice. But, Manthey said that if she did get a notice, it would be for current arrears because back bills like hers are placed in protective status and, therefore, don't trigger disconnections.

Friebel said she would not have purchased her business had she known the true electric costs, which she can't afford. She thinks her only recourse is to take the utility to court.